By Kevin Komiega
October 2, 2008 -- Hewlett-Packard made a move to strengthen its presence in the iSCSI SAN market this week when the company announced it has signed a definitive agreement to acquire LeftHand Networks for $360 million in cash.
HP's interest in LeftHand appears to be threefold. The main reason for the acquisition, according to Lee Johns, HP's director of marketing for entry-level storage and storage blades, is LeftHand's hardware-agnostic storage architecture, which allows the SAN/iQ software to run on any hardware platform.
Second on the list is LeftHand's presence in the iSCSI storage market. "This is an opportunity to expand our reach, particularly into the mid-market SAN space," says Johns. "We have some strong iSCSI products today, but felt there was a gap in our product lines for customers who were looking for a much more scalable SAN with more advanced software features."
Last, and certainly not least, LeftHand has done a lot of work in the area of virtual server environments. The latest release of the company's SAN/iQ 8 software, announced at last month's VMworld conference, includes new cloning technology that streamlines the process of rolling out virtual desktop infrastructures. LeftHand's software is also capable of running as a virtual appliance in virtual machines and convert internal storage on or across x86-based VMware VI3 servers into a clustered iSCSI SAN.
Johns says the addition of LeftHand will help HP build a better midrange storage portfolio and will bridge the gap between HP's entry-level StorageWorks All-in-One Storage System (AiO) and StorageWorks Modular Smart Array (MSA) product lines and the high-end StorageWorks Enterprise Virtual Array (EVA) line.
Much of the product integration work that comes along with acquisitions has already been completed due to a pre-existing OEM deal between the two companies. LeftHand's software is already certified to work with a range of HP products, including ProLiant servers, BladeSystem infrastructure, ProCurve Networking, and Insight Control management software.
"Their software runs on industry standard server platforms and today the majority of their products actually run on our ProLiant servers through an OEM relationship. They purchase our hardware platforms and re-brand them," explains Johns. "Since the software is already integrated with our hardware, it also already integrates with most of our management tools."
As a member of the HP Developer and Solution Partner Program (DSPP), LeftHand's SAN/iQ software runs on top of ProLiant DL320s servers as SAN storage nodes. LeftHand supports HP ProCurve networking equipment for use in building iSCSI-based IP SAN infrastructure, and SAN/iQ also supports the HP-UX native iSCSI software initiator.
LeftHand is a privately held company based in Boulder, CO. It has 215 employees, more than 500 resellers and distributors worldwide, and more than 11,000 installations across 3,000 different customers.
HP's acquisition of LeftHand is subject to closing conditions and is expected to be completed in HP's first fiscal quarter of 2009. Following completion, LeftHand's business will be integrated into HP's StorageWorks division within the Technology Solutions Group.
HP's acquisition of LeftHand draws some interesting parallels to Dell's purchase of EqualLogic last year. Both EqualLogic and LeftHand made iSCSI SANs. Both designed their products with an eye toward supporting virtual server environments. The major difference is in the price tag. Dell shelled out $1.4 billion for EqualLogic, while HP paid $360 million for LeftHand.
Andrew Reichman, a senior analyst at Forrester Research, says both deals, while similar, fit the respective buyers like a glove.
"This acquisition is much less expensive than the Dell-EqualLogic deal, but EqualLogic was a better fit for Dell because it had more of a hardware-focused product that was in a box and ready to go," says Reichman. "The acquisition of LeftHand takes HP into new areas in terms of flexibility. HP can take LeftHand further because now they can take anything and turn it into a SAN using industry standard hardware components."
Reichman says HP needed to re-energize its storage lineup, as it has been lagging behind the rest of the industry in the iSCSI market.
"This acquisition gives HP much more credibility in iSCSI, which is an area where it was weak. Every storage vendor has been trying to make the case that its SANs are the best for VMware-attached storage. The traction that LeftHand already has in the SMB market with VMware will allow HP's sales and manufacturing organizations bring the technology to a broader audience."